Corporate Veil

[Stinger]

i am trying to reclaim a deposit I paid to a “builder”, on reflection he had no intention of ever carrying out the work.

he has ignored all correspondence so need to go to the small claims court. He has tried to close the company and I objected and have 6 months to start legal action. The company will have no assets so I am interested in using corporate veil law to recover the money.

My my understanding is this will make him liable for the debt and increase the chances of recovering the money however from what I have read this is difficult to use. Does anyone have any advice or experience of this? Or am I just wasting my time and money?

Thanks

[jaguarsuk]

What corporate legislation are you saying that the company has contravened?

[R0b]

What corporate legislation are you saying that the company has contravened?

There's no legislation, piercing the corporate veil to hold a director personally liable is based on common law.

Stinger

My my understanding is this will make him liable for the debt and increase the chances of recovering the money however from what I have read this is difficult to use.

Just because there may be a breach of contract or a refusal by the builder to give your deposit back, there is no automatic assumption that he will be held personally liable. There is a very high bar to reach before a court will pierce the veil and hold the director responsible to pay you and 95% of those who bring a claim are unsuccessful.

The whole purpose of setting up a company is to create a separate legal personality so that in the event things go wrong, the persons behind the company are not personally liable. You would have to prove that the builder deliberately set up the company as a sham in order to evade the wrongdoing and that is where the difficult lies in where many claimant's fail.

Going beyond piercing the corporate veil option (and depending on the facts which you have not explained) you may have other causes of action so that you could claim against the builder. For example, unjust enrichment, or dishonest assistance or knowing receipt. The latter two actions relate to the money you had given to the builder knowing it was held on trust for the company and the builder (in breach as a trustee) instead uses the money for some other benefit to himself other than to put it into the company accounts.

We are now venturing into complex technical arguments which would require specialist legal advice, and I make no comment or take any view as to whether those causes of action would be appropriate in your situation.

[Stinger]

Thank you for your reply Rob. Please can you let me k ow what reasons I would have to claim directly from the builder. I can supply a timeline if it would help.

i have tried to get legal advice - which I am prepared to pay for - but unfortunately I never hear back from the solicitors I email!

[jaguarsuk]

I have tried to get legal advice - which I am prepared to pay for - but unfortunately I never hear back from the solicitors I email!

That may be an indication of your likelihood of success.

[R0b]

Thank you for your reply Rob. Please can you let me k ow what reasons I would have to claim directly from the builder. I can supply a timeline if it would help.

i have tried to get legal advice - which I am prepared to pay for - but unfortunately I never hear back from the solicitors I email!

Difficult to explain and is complex which as I said requires some specialist legal advice which is probably not going to come cheap either. I would suggest you have a read of the following link to get at least a basic understanding of dishonest assistance / knowing receipt.

https://www.cilex.org.uk/pdf/SA%20u5...Trusts.web.pdf

Essentially the point I am getting to in relation to unjust enrichment, dishonest assistance and knowing receipt is that the builder did not account for the money i.e. it was used for his own personal benefit rather than the company's benefit. These types of argument require careful analysis and consideration which is why you need someone with the knowledge and know-how to determine if you stand a chance of even arguing something like this. Again, it's all about having the evidence to prove your case and if you don't have much or very little, then my view is that you are not going to succeed.

[Blue Spring]

Difficult to explain and is complex which as I said requires some specialist legal advice which is probably not going to come cheap either. I would suggest you have a read of the following link to get at least a basic understanding of dishonest assistance / knowing receipt.

https://www.cilex.org.uk/pdf/SA%20u5...Trusts.web.pdf

Essentially the point I am getting to in relation to unjust enrichment, dishonest assistance and knowing receipt is that the builder did not account for the money i.e. it was used for his own personal benefit rather than the company's benefit. These types of argument require careful analysis and consideration which is why you need someone with the knowledge and know-how to determine if you stand a chance of even arguing something like this. Again, it's all about having the evidence to prove your case and if you don't have much or very little, then my view is that you are not going to succeed.

Hi, would it be fair to say that if a company director failed to provide any receipts or invoices, and that he took cash payments, that this was an example of unjust enrichment, dishonest assistance and or knowing receipt?

Could a given director be forced to disclose related payments submitted via his accounts for a related construction contract, in order to prove this dishonesty as part of a legal claim against him?

If specified with the POC that these payments were not disclosed, by the very nature of the fact this has been identified would he be obliged to defend this position, or if not ultimately be found guilty by default?